Company Health Check 2013

An exclusive analysis of the Top 100 construction contractors has for the first time ranked them not just according to size and profitability but also according to financial health.

When it comes to their books, big definitely does not necessarily mean beautiful. This analysis has been carried out by corporate health specialist Company Watch exclusively for The Construction Index. While Balfour Beatty once again ranks as Britain’s largest contractor this year, it is way down the financial health league, in 77th place. Interserve may have the biggest profits of all UK contractors, but it ranks just 29th in financial health. Top of the league – Britain’s financially healthiest contractor – is the Midlands-based regional contractor Stepnell, followed by Cumbria’s Thomas Armstrong. Company Watch uses a proprietary algorithm to get right into the published accounts of organisations. An established method for judging the financial strength of a business is to look at seven key financial ratios and the interaction between them. One is profitability, but there are three more involving the funding structure and another three concerned with the asset profile. Mix them together, employ mathematical wizardry and out comes a health score: the Company Watch ‘H-Score’ expressed as a score out of a possible 100. Over 50 is above average; any score below 25 is a clear signal of vulnerability – what Company Watch calls the Warning Area. Over the past 15 years, one in four of the companies in the Warning Area has gone on to either file for insolvency or undergo a major restructuring. Read more